Learn To Like The Services Industries

We have become a nation of services industries.

More than 75 per cent of employment in Australia comes from the services sector, according to data from the OECD. In comparison, services account for 81.1 per cent of employment in the US, 79.7 per cent in the UK and 34.6 per cent in China.

I find that when I discuss the economy of a particular country, often the conversation involves how “we don’t manufacture anything, anymore”. But some of those service companies do produce a product, although its not made of wood, cement steel or plastic.

Why do we place such a premium on manufacturing jobs and industries?

Is this “premium” due to historical reasons, ’cause my dad worked at Ford Motor Company and thus it’s noble and good?

Is it because they are “things we can touch”?

Does it make it more believable and trustworthy that it actually exists, if you can “touch” it?

Does having plant and machinery make managers and investors feel better because its a tangible asset on their balance sheet?

Financially speaking, service businesses surely have higher margins, less fixed costs, require a smaller amount to get started and seem to be more flexible, while the manufacturing industry seems to have the opposite attributes.

Unless you wish to live in a socialist economy (whilst lining up for your weekly ration of bread & milk), free market capitalism and its forces determine the most efficient place (source, cost & delivery) where manufacturing takes place.

Has it been that terrible to have lived in those clean, free, safe, progressive, enriching and prosperous high service employment countries that I mentioned earlier?

The pay cheque matters more than your brand

A news tidbit from the Australian labour front appeared in The Australian newspaper on Oct 7, 2011, raised my interest.

The story said…..

“Kevin Reynolds, the head of Western Australia’s Construction Forestry Mining Energy Union, yesterday described large resource-sector companies in the state as “bottom-feeding freeloaders who suck up labour trained by other people without contributing a cent”.  Mr Reynold’s call for the major resource firms to contribute to the state’s construction industry training fund was backed by home builder ABN Group’s Dale Alcock.”

I haven’t formed a distinct view on this statement or topic yet, however the one thing I have noticed increasingly, whether its the mining industry or financial services, employees over the past 10-15 years are working simply for the pay cheque more than ever!

Company or even career loyalty is not as common as I once remember. All you need to do is look at the employment history of people on LinkedIn. It is difficult to find tenures lasting longer than 18 months in some profiles. An employee’s clear intent on using your company and knowledge as a “step-ladder” towards something else is possibly putting employers offside.

Whether companies need to increase investment in “human capital” more than equipment or projects is probably a complicated question to answer.

When I started in the stockbroking business nearly 20 years ago, all I wanted to do was work as a stockbroker. I wanted to work for one of the big Wall Street firms.

Once upon a time, employees worked for what the company believed in, rather than solely for the pay cheque and puffing up their resumes.

 

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